Income Investor pick RPM International (NYSE:RPM) just reported a strong second quarter of fiscal 2007, riding a wave of strength in the industrial market. Exactly how good the quarter was depends on how you look at it.

The bottom line grew from $18.5 million last year to $52.9 million this time around. Wow, a 186% gain! Uh, not so fast. Last year's results were impaired by the disastrous hurricane season, which disrupted operations for this paint producer. Add that $10.2 million back to the fiscal 2006 numbers -- it seems like a fair adjustment, given the one-time nature of those disasters -- and the income growth drops to 84%. That's still pretty impressive.

After that, we get into murkier waters. The asbestos trouble at RPM isn't over yet, after all. That $300 million settlement last summer was but one of many legal proceedings. This quarter, RPM received $15 million in a settlement with an asbestos insurance carrier, while the year-ago period saw the company paying out $15 million in legal charges. Back all of that out if you want, and the final earnings growth figure stops at 12%, nestling at the top of management's earnings growth target for 2007.

Of course, that last adjustment is entirely optional. RPM carries a $391 million reserve fund for asbestos-related costs, an indication that management is planning for regular and largely predictable costs. To me, that makes it an ongoing cost of operations, not a one-time item, though your mileage may vary.

RPM continues to point to a weak consumer products segment holding back the results. CEO Frank Sullivan said that his company is sharing the "sluggish business climate being experienced by our major retail customers." Major resellers like Wal-Mart (NYSE:WMT), Lowe's (NYSE:LOW), and Home Depot (NYSE:HD) are still holding back their orders a bit, in turn a result of slower real estate markets. Homebuyers need paint and roofing, especially if moving into a fixer-upper resale.

Consumer products make up 35% of the company's sales today, and 34% of the operating profits. Sherwin-Williams (NYSE:SHW) and Valspar (NYSE:VAL) may have larger stakes in the retail sector, but it matters to RPM, too. The near future for RPM, then, depends to some degree on where you think the housing trends will go next.

For further Foolishness:

RPM is a Motley Fool Income Investor recommendation. Both Wal-Mart and Home Depot have been picked by the Motley Fool Inside Value team. Take any of our newsletters for a free 30-day trial to see what the hoopla is all about.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, though he's about to give Sherwin-Williams some business. You can check out Anders' holdings if you like, and Foolish disclosure looks great in Armadillo Yellow.